Here appear occasional jottings of my random musings. Profound or jejune, they reveal the contours of my mental universe, with world history, intellectual history, civilizations, philosophy, religion, society, knowledge, and books as some major themes.
Since May 2011, this blog has been exclusively focused on Singapore. All my other reflections are now posted in "Notes from Noosphere" (see link under "Miscellany" on the right margin).

Thursday, May 31, 2012

Singapore is brilliant at self-promotion, says an Australian analyst, but it is
no financial dynamo. Much of the world has been deluded by its hollow roars of
success.

Singapore, the modern city-state known for its authoritarian ways
and conservative government, has a reputation for functional efficiency and
capitalist success. The smallest member of Asean geographically is often touted
as one of Asia’s great success stories – a gleaming city that emerged from
the tropical swamps under a strict but wise autocrat, Lee Kuan Yew.

But a fascinating book by Australian Rodney King looks deeper into the
“the Singapore Miracle” and reveals that a lot of the city’s supposed successes
are in fact hot air.

Reports of Singapore being a dynamic commercial melting pot are, King says,
simply the oft-repeated claims of a government that tolerates little dissent,
and city leaders who may actually have stifled the sort of entrepreneurial
dynamism you get in places such as Hong Kong, Shanghai, Taiwan and maybe even
Bangkok. King is a Perth journalist who lived in Singapore for a number of years
and worked briefly at the Straits Times.

“The Singapore Miracle – Myth and Reality” casts doubt on the city-state’s
claims of cutting-edge efficiency, global competitiveness, economic freedom and
transparency. Most Singaporeans are not as affluent as their government makes
out, King says in his extensively documented, 500-page tome.

“Books about Singapore usually praise its achievements or criticize its
authoritarian rule,” he writes. “But few ever probe its widely publicized claims
that it is a brilliant success that other countries should follow.” King argues
that Singapore’s workforce productivity is often mediocre and well below that of
the West and Asian economies such as Hong Kong.

“The country also displays endemic inefficiencies at both macro
and micro-economic levels. The performance of the construction, financial and
service sectors is second-rate, while Singapore Airlines does not deserve the
top rankings it receives.”

Singapore, he says, has “a dependent and underdeveloped
economy”. Multinational companies and state enterprises predominate, and
the economy has “low entrepreneurial and innovative capacities and
an under-educated workforce”.

The city-state’s supposed affluence is also largely a myth. About 30 per
cent of the population still lives in poverty by Western living standards,” he
says. And Singapore’s Housing Development Board, Central Provident Fund and
state-run health schemes have severe shortcomings.

What Singapore has been good at, he says, is marketing itself.

“Singapore has brilliantly sold itself to the world as an amazing success
story to attract foreign investment and talent. It’s managed to get most Western
think-tanks and ratings agencies to give it top scores for such things as
competitiveness, transparency, economic freedom, etc.

“These bodies reflect the interests of foreign capital and
their methodologies are shoddy and incompetent at times. And the statistics they
are fed by the Singaporean authorities are often dubious and designed to put
Singapore in the best light.’

“To sell itself to the world Singapore has also denigrated and patronised its
lesser-developed neighbours.”

Singapore was hardly an economic backwater when Lee Kuan Yew took power in
1959, says King, who has no special regard for the premier, who held office
through his People’s Action Party (PAP) for 31 years. Lee is now known as a
“Minister mentor” and elder statesman.

“Lee is always carefully listened to, and rather too politely … his views and
lectures often receive reverential attention from opinion lenders, American
think-tank experts and others who often have little direct first-hand knowledge
of Singapore.”

In the early to mid-’60s, Singapore had one of the highest living standards
in Asia, with one of the best-educated and hardest working populations. Its
strategic location and magnificent harbour – with extensive British-built
shipyard facilities – alongside one of the world’s busiest sea-lanes, meant that
it became a natural transport hub. And these features were a great asset for
industrialisation.

The strategies Lee used to develop Singapore were an open-door policy to
foreign capital and export orientation to tap into global trade. They helped the
city-state enjoy double-digit growth from the ’60s to the ’80s.

But the Lion City became heavily dependent on foreign capital while state
enterprises focused on infrastructure and “nation building concerns”.

Entrepreneurial and innovative capacities have suffered because of a lack of
domestic competition and the predominance of state bodies. Public servants
running state boards often have little experience of the private sector “and no
idea how to run a business”, King and other analysts say.

“The local private sector, normally the seedbed of innovation in most market
economies, is stunted and starved of venture capital,” King writes. “The
country’s capacity for indigenous research and development and entrepreneurial
and innovative endeavors remains limited.

“Heavy state control of the econ’omy is exercised through an extensive layer
of state enterprises. The state imposes this control through layers of red
tape.

“The government also manages a big chunk of the people’s savings through
forced savings and owns 72 per cent of the city state’s land. Moreover, the
government controls the unions and most of the labor force. Equally mythical are
Singapore’s claims to being transparent. Nothing could be more untrue. The
operations of Singapore’s government and bureaucracy are swathed in
secrecy.”

King counters claims of high home-ownership levels, saying 86 per cent of
Singaporeans rent government flats from the Housing Development Board on 99-year
leases.

The author is provocative but very thorough. Every aspect of life in the
city-state is analysed in detail.

“Singapore’s flaws are hidden by the PAP state’s vigorous
marketing campaign,” he says. And most local and foreign journalists are usually
too restricted or intimidated by government defamation laws and other penalties
to challenge or refute” the “river of statistics” promoting Singapore’s
achievements.

There is a wealth of statistical and anecdotal material in this book to
counter the official lines – or lies. Economists and anyone with an interest in
Singapore should take note. This book could change the way you view Singapore.

But, perhaps the saddest facet of King’s work is not what he’s written, but
the fact that the people who most need to read his book may find it hard to get,
if Singaporean bookshops refuse to stock it, as he expects.

Related:Singapore a poor model for Myanmar, William Barnes. Asia Times Online (here)

Kenneth Jeyaretnam’s Open Letter to the Minister for
Finance

I note that a question in three parts was tabled during the Parliamentary
sitting on 14th May 2012 by Mr. Desmond Lee, MP for Jurong GRC, on
the subject of our republic’s US$ 4 billion loan commitment to the IMF.

I have checked the Parliamentary record and I can find no mention of
Parliament having been told about this loan previously or asked to give its
approval. I first noticed it when the IMF Committee of which you are Chair
announced the decision to raise the IMF’s lending capacity on 20th
April 2012 and thanked Singapore for its contribution. The government-controlled
media carried a short piece a day later and I wrote about it at more length in
my blog on 25th April and
28th April 2012.

It may be argued that it was not unconstitutional to promise our money
without first asking Parliament’s permission. However I would like to contrast
your approach to our funds with that taken by a fellow IMF member, another small
nation with a similar population and with two sovereign wealth funds, namely
Norway. On May 15th 2012 the Norwegian Finance Minister asked
Parliament for approval of a contingent loan of up to US$9.2 billion from the
Norwegian Central Bank to the IMF.

Turning to your answers to Mr. Desmond Lee’s question, in answer to Part a
you state there that in the event Singapore’s commitment is called upon, the $5
billion loan will be coming from the Official Foreign Reserves of the Monetary
Authority of Singapore and not from the Government Budget. I wonder whether
you would kindly explain what you mean when you say:

“However, there will be no change in OFR if the loan is drawn on by the
IMF; what would happen is a conversion from a foreign investment asset to a loan
to the IMF, which will still count towards OFR.”

I hope you will excuse my ignorance but I am afraid I do not understand how a
contingent loan or loan guarantee is a foreign investment asset. Should it not
rather be treated as a contingent liability until such time as it is actually
drawn down? And by saying that it will be converted from a foreign investment
asset to a loan are you not admitting that it falls outside the scope of Section
24 of the MAS Act?

If this is the case, then does it not require Parliamentary approval? I
cannot see that there was any resolution of Parliament to approve it. As the
IMF communiqué and your own answer make clear, the contingent loan is not part
of an increase in Singapore’s quota at the IMF and therefore is not exempted
from the necessity for Parliamentary approval under the Bretton Woods Agreements
Act.

May I also ask whether Presidential approval was obtained since this is
required in any event unless the loan commitment is covered by Section 24 of the
MAS Act?

Part b of MP Lee’s question asks whether the loan will go to bail out Greece
and the other periphery Eurozone countries. Your answer in effect is: yes, it
will. In your words, “The aim is to give the IMF the strength and credibility to
help prevent a worsening of the [Eurozone] crisis and limit the risk of
contagion”.

With reference to Part c, I am not questioning whether at this stage there is
any risk that MAS will not be repaid since the risk of the IMF becoming
insolvent must be fairly small. However this is mainly because the members of
the IMF would be expected to step in to support the IMF should the borrowers
default or require more financing if they are to avoid default. Even if the
loan commitment is given by the MAS rather than the government the government
ultimately stands behind the MAS as guarantor. In your answer you admit that
the enhanced resources are to deal with the Eurozone crisis even though it is
not specifically earmarked for the Euro area. Thus it is likely that if the
financial position of the Eurozone continues to deteriorate and additional
resources are required, the IMF will look to Singapore for a share of any future
increase in its lending capacity.

The Reform Party is not in principle opposed to increasing Singapore’s
commitment to the IMF though we note that both the US and China have so far
failed to agree to do so. However one of our main objectives is to ensure that
there is effective Parliamentary scrutiny of the Executive with the aim of
ensuring transparency and accountability in government. This objective is surely
in line with the IMF’s own standards for good governance.

I would like to note for the record that Mr. Desmond Lee of the PAP’s
question followed my two blog articles:

These were the first to raise questions about the need for Parliamentary and
Presidential approval of Singapore’s loan commitment to the IMF. May I ask
whether the timing and content of his question was in any way influenced by
this?

Finally as an aspiring first world nation do you not think our Parliament
should aspire to the highest levels of transparency and accountability and
follow Norway’s lead and in so doing go beyond the minimum levels of
transparency and best practice prescribed by bodies such as the IMF?

Following my letter to the Ministry of Finance a lot of people have been
asking whether we have been here before with the Indonesian loan shenanigans of
1997. Isn’t this just déjà vu? My answer to that is that I don’t believe so. We
shouldn’t get ready to throw in the towel yet.

The world has moved on since 1997 and even Singapore is changing, albeit
still under the rule of the same political Party who gained a majority and a
stranglehold by default in 1960. That same Party has just been given a
resounding defeat in Hougang. They attempted to run a campaign that really did
seem like a case of déjà vu and it backfired. In 1997 we had only two MPs and
one NCMP in Parliament and notably it was the NCMP who spoke up. Fifteen years
later we now have six MPs in Parliament. It doesn’t matter that those 6 MPs may
have voted with the government on the Budget. They brought down a GRC in 2011
and the Hougang by-election result has kept up the pressure.

It is the 40% of ordinary Singaporeans who voted in that watershed election
against the government, despite all the veiled threats and intimidation, who
will keep them feeling that pressure. That pressure made our ministers fall on
their swords and take a pay cut. The voices of those 40% are still being heard
through the new media.

With its push to become a global city Singapore cares much more about its
international reputation. I have already pointed out how the Norwegian Finance
Minister went to Parliament on the 15th May to ask for approval for
his country’s loan to the IMF.. Our Finance Minister is Chairman of the
International Monetary and Financial Committee of the IMF so he would hardly
wish to be seen as opposing greater transparency and accountability, an explicit
objective of the IMF.

In 2012 the economic background is one of major institutional collapse,
double dip recession and a crisis in the Eurozone that hurts us all. We are also
seeing a new scrutiny put on transparency and regulation and again the IMF
itself is well aware that good governance is key to financial stability. They
won’t easily forget that Greece falsified its way into the Eurozone by
manipulating its figures. As a result of this not only has Temasek Holdings
been forced to increase the amount of information it provides but even the very
secretive Abu Dhabi SWF has coughed one up.

We are on very safe ground now in demanding accountability from our Ministry
of Finance and we will receive support in this. So, while it is always possible
that the government will take the same tack as in 1997, try to bamboozle us with
Latin and financial terms , I do not think we should worry too much. In any case
I know the financial terms and even better I know Latin!

For those who aren’t familiar with the case, back in 1997 a similar question
was asked in Parliament by an NCMP about the constitutionality of granting a
US$5 billion loan to Indonesia without seeking Parliamentary or Presidential
approval. This was brushed aside by the PAP government on the advice of the then
AG Chan Sek Kheong. ( he of the miraculous materialisation into a polling booth
decision) The PAP argued that Clause 144(1) of the Constitution, which states
that

“No guarantee or loan may be given or raised by the Government”, should be
interpreted as meaning;
“No guarantee may be given or loan raised by the
Government”. This meant that while the giving of a guarantee required
Parliamentary approval, the giving of a loan did not.

Some Latin was used to explain it away.

I am not a lawyer but I do believe that the then AG erred in his
interpretation of Clause 144(1). The natural and ordinary meaning of the words,
it is clear to me, is that both guarantees and loans cannot be given or raised
by the government except with parliamentary approval. If the intentions of the
drafters of this clause had been to say that only the giving of guarantees but
not loans needs to be approved by Parliament then surely the clause would have
read

“No guarantee shall be given or loan raised …”.

Rather than
“No guarantee or loan may be given or raised by the
Government”,

It also makes no sense from an economic or accountability standpoint that
guarantees, which are merely contingent liabilities, should require
Parliamentary approval while loans, which involve an actual payment, are
exempted. It seems to require some very convoluted logic to explain why one
would need scrutiny but not the other.

The Parliamentary question from Desmond Lee, from Tharman’s own GRC, has all
the hallmarks of a stage managed exercise. I am convinced the question was
tabled solely to convince the IMF that the loan commitment has been ‘robustly’
debated in Singapore’s Parliament. I was accused of being convoluted in my
letter but I was writing as one economist to another and quoting Tharman’s
convoluted speech back to him.

The truth is Tharman and Lee’s language to the house was unnecessarily
complicated. Tharman’s job is to be accountable to the people , to provide for
effective Parliamentary scrutiny of the Executive. It is not his job to
obfuscate. Just as in the Budget, which I pointed out is not set out to IMF
standards, which is a masterpiece of opacity and misdirection (here).

Of course couched in Tharman’s language my letter may have been difficult to
follow so let me spell it out for you with a bluntness that was of necessity
lacking previously. I’ve written as in lines from a short play.

The setting: A Company Shareholder Conference.

Employee: ( posing as concerned shareholder) “Boss, we
work so hard all our lives, even after death pay and pay and we never get any
safety net or free school or health and you save up all our money ‘cos our
Gahmen is so clever it never spends any on us. So now we got big reserves is
it?

Boss: That is correct.

Employee:These lazy ang moh get everything free even
they never work, they get welfare, they get free child birth, free school,
hospital even they got expression free is it?

Boss:Correct again.

Employee. You loan five billion dollars of our savings
to these Ang mo who destroy their economy is it?

Boss:Yes

Employee:Thank You. You are great

In any case whatever the correct interpretation of Clause 144(1), I still
stand by the point that the principles of good governance and accountability
require that the government seek Parliamentary approval for loans and
guarantees. More importantly I cannot believe the IMF would have appointed
Tharman to head of a committee without expecting him to demonstrate exceptional
levels of commitment to good governance and accountability free of tricks,
semantics, Latin and an AG who believes in magic.

It’s your money! You have a right to know how much there is, where it is and
to have a say in how it is used.

His Excellency Tony Tan Keng Yam
Office of the President of the Republic of Singapore
Orchard Road, Singapore 238823

Dear President,

Firstly I would like to thank you for your gracious response to our invitation to the JBJ Memorial event last year, even though you were unable to attend due to a prior engagement.

On 29th May I wrote to the Finance Minister asking whether Parliamentary approval had been obtained for our republic’s recent loan commitment of S$5 billion to the IMF. I asked also whether Presidential approval had been obtained as would appear to be required under Article 144(1) of our Constitution. I enclose a copy of my letter to the Finance Minister for your reference.

As I have not received a reply from the Finance Minister I am writing to you to ask whether you would kindly enlighten me as to whether Presidential approval was ever sought or given for this loan commitment.

The verdict is out – Png Eng Huat is the new Member of Parliament (MP) for Hougang with 62.09% of the votes. It was a slight dip from 64.8% of the votes for incumbent Yaw Shing Leong last year, but depending on which camp you are from, the dip can be seen as insignificant or significant.

The by-election

The by-election was the consequence of the Workers’ Party (WP) expelling the Hougang incumbent MP, Yaw Shin Leong due to his failure to account for allegations of his affair with a fellow party member. Some believe that the magnitude of such a scandal may shake the voters’ belief in the WP, and predicted a drop in WP’s share of votes.

Things also did not appear to be rosy at the WP side close to the elections. Sajeev, a former WP candidate resigned from the party close to the elections, and this was followed by Poh Lee Guan, another WP member, receiving a political donations certificate without the party’s knowledge. WP denied it was aware of Poh’s actions and reiterated its stand that Png was its nominated candidate for the Hougang by-election. Based on this sequence of events, observers speculated the possibility of fracture within WP’s ranks.

Hence, the question that interested observers are asking is whether the Yaw episode, Sajeev’s resignation and Poh’s actions had shaken voters’ belief in the WP brand.

In comes the Auntie killer, Desmond Choo

With his boyish good looks and charms, even the Financial Times dubbed Choo the “auntie killer”. Choo contested last year and lost with Yaw gaining 64.8% of the votes. His approach to the campaign revolved around appealing to the senior citizens, albeit with a more personalised touch. Choo should not have anything to complain about with regards to his campaign strategies, he wanted it to be straight fight between himself and WP’s Png, and even observers thought he did not expect the help of senior PAP leaders. In fact, if the senior PAP leaders had not entered the fray, Choo could have done better, according to one school of thought.

Did senior PAP leaders contribute to Choo’s loss

It all started with Deputy Prime Minister Teo Chee Hean’s bringing up of Png’s ability to be a Non-constituency Member of Parliament (NCMP). If Png is WP’s best candidate, why they didn’t send him into Parliament after Png’s East Coast GRC team was among the wards with the best losing results among the opposition, Teo questioned.

Png clarified that he was against the NCMP post, and that he had taken his name out of the ballot. However, leaked minutes by a person with the moniker “secret squirrel” added more drama to the plot in the sense that Png’s name was indeed in the ballot, but this was refuted by his former East Coast GRC team mate, Eric Tan, who came out to say that Png did tell his party mates that he did not want to be considered for the NCMP post. More tellingly, Tan also mitigated in Png’s favour when he revealed that the former did not want to be sent to Joo Chiat, where the chance of gaining an NCMP position is high.

It turned out that Teo’s allegation is a case of much ado about nothing. A difference in contexts, as a NAR writer eloquently put, especially between an individual one and an organisational one. Png, as an individual wanted to be out of the running for the NCMP position, so it is natural for him to tell the world that he personally took his name out of the ballot process. However, WP, as an organisation will put everyone’s name on the ballot slip, and this is the organisational context.

However, Teo further harped on the issue. People have said that this will count against the PAP, for example, in Aljunied GRC during the 2006 General Elections, when the constant hammering of James Gomez’s error in telling the administrators at the election department that he had filed his nomination forms when he did not in actual fact. Even Png said in a rally that this will not get the PAP any votes.

It was very telling that Teo did not appear to speak on the last day of Choo’s rally. Some speculated the PAP may have sensed that the ground sentiments had grown negative on PAP’s constant hammering of the NCMP’s issue especially via Teo, but we all do not know why Teo was not there on the last day. Speculations remain as speculations, and unverified.

National issues

It was obviously going to be a by-election that involves national issues. The speeches of Png’s WP colleagues have touched on those – the foreign talent policy, which in a Bloomberg article where a Chinese national driving a Ferrari was involved in an accident which took the life of a Singaporean cabbie that fuelled anti-foreigner sentiments close to the by-election, Yee Jenn Jong’s speech on scholarships, Gerald Giam’s talk on financing healthcare, other issues brought up during the rallies were the sardine-packing of our public transport during peak hours, the costs of HDB flats, declining birth rates, etc. Thus, the Hougang by-election was also framed as a referendum on the PAP government’s performance.

The final result – 62.09% (WP) vs 37.91% (PAP)

All the points have been brought up earlier but how would they contribute to a final verdict? WP had some things going against it, the Yaw incident, Sajeev’s resignation, and Poh’s personal accord of obtaining the political donation certificate, all suggesting a fracture in party ranks. All these are speculated to have affected public confidence in the WP.

However, there are shortcomings on the PAP’s side. Teo’s entry into the fray with a constant hammering of the NCMP issue could have generated negative sentiments. Finally, you cannot exclude national issues. It is quite simple. It is never a completely local election. If national issues are affecting voters across the board, both Hougang and beyond, they will obviously poll in favour of a candidate who could provide an extra voice to detrimental policies. It is not that complicated, a basic tenet in Politics 101.

Therefore, it is not only the question of how badly did the shortcomings on the WP side affected them, but it also should be considered along with how badly the PAP’s shortcomings affected the result. It is not simply the result of a single factor that determines outcomes, but those that are connected with the two parties.

What now for WP? The topmost thing on Png’s mind would be to build on the current support. If he serves the residents of Hougang well, the memories of Yaw will be nothing but a distant one. For the PAP, it has to rethink on firstly its current policies, and secondly, its electoral strategies. Questioning integrity of candidates will not cut it, and in terms of policies debate, it has to start offering real solutions. That is what people want to see, instead of a long talk on why so and so has questionable integrity or abilities.

However, be that as it may, the final results still stand, PAP’s auntie killer was ‘killed’ a second time at the polls.

It would take all the propagandizing efforts by the mainstream media to
portray the Hougang by-election as anything less than a bloody nose for the
People’s Action Party (PAP).

None of the factors that conventional wisdom would expect to favour the PAP
helped them in the least: a very public resignation by the WP incumbent (Yaw
Shin Leong), the last minute possibility that a WP veteran might split the vote
(Dr Poh Lee Guan), and rumours of internal party fractures over race (Sajeev
Kamalasanan).

On the PAP’s side, no effort was spared in the attempt to take Hougang back:
free porridge, free legal clinics, free hearing aids and loving mainstream media
coverage portraying Desmond Choo as every Hougang mother’s favourite son and an
untiringly youthful sportsman.

After all of the above, plus overwhelmingly favourable coverage in the
mainstream press, all the PAP won was an additional 145 votes.

As we predicted, NCMPgate made hardly a dent in the Workers’ Party (WP)
winning margin in Hougang.

In fact, the opposite is probably true. One can only surmise that the
headlines alleging dishonesty might very well have put voters off the PAP’s
negative campaigning.

What probably rankled most was the hypocrisy: Desmond Choo’s promise to wage
a gentlemanly campaign was hijacked midstream by a sledgehammer attack from
Deputy Prime Minister (DPM) Teo Chee Hean.

For middle-ground voters who could have been persuaded that Desmond Choo
would be an “independent” voice in Parliament, all doubts of independence were
put to rest by DPM Teo’s intervention.

As many Singaporeans asked, if Desmond can’t stand up to his party bosses in
the campaign, how is he going to stand up to them in Parliament?

To give credit where it is due, Mr Choo has run an impressive campaign for
Hougang.

At a youthful 33 years of age, Mr Choo unflinchingly took on decades of
Hougang history where even more seasoned politicians would have blanched. The
energetic Mr Choo has certainly been an improvement from the forgettable
(indeed, now very much forgotten) Eric Low.

Mr Choo’s campaign had much to commend it, but he must surely be rueing the
day his party bosses put their foot in it.

The message Hougang voters have sent out loud and clear is this: voters of
today don’t appreciate the bullying, lecturing, and phoney moralizing of the old
PAP.

Pritam Singh probably nailed it when he warned the PAP: “those in glass
houses shouldn’t throw stones”. The PAP would do well to bear this in mind for
2016.

For now, TOC would like to convey our best wishes to the Member of Parliament
elect for Hougang SMC, Mr Png Eng Huat.

Thursday, May 24, 2012

One year after the watershed
General Election of May 2011 (GE 2011), political observers, reading the signs
being sent out by the government, must be wondering about when – or if – the
changes that had then seemed an inevitable consequence of the election, would
actually take place. For currently, the signs are mixed and ambiguous, leading
to an anxious, cautious ‘wait-and-see’ attitude on the part of the
people.

Back then, there was no
ambiguity at all about the reactions of the three major players on the political
stage. The PAP government, the Singaporean electorate and the opposition
parties- had clearly emerged from the amazing election with their old selves
so transformed (by pain or victory, as the case might be) that they all conveyed
the same message: things would never again be the same. Some line had been
crossed, some psychological barrier breached.

The government had conceded,
even if only implicitly, that it would have to give up the old PAP authoritarian
stance that had been its hallmark for half a century; the people, in a new mood
of confidence, had signaled that they would never again be apathetic, timid and
silent about issues that affected their lives; the opposition parties,
encouraged by the new interest in them, had jubilantly cast off their old image
as weak, disorganized groups not worth taking seriously.

In the heady days immediately
following the election, a newly humbled PAP government made an all-out effort to
placate voters. It quickly did away with the two policies that had most angered
the voters, namely, those related to the ministerial salaries and foreign
workers. It went further to promise no less than a ‘re-invention’ of leadership
style, in order to meet the expectations of the electorate. On the part of the
people, there was a mood of euphoric expectation that a ‘re-invented’ PAP would
surely usher in , at long last, a truly open, engaged, accountable and
mature society.

So is this good outcome taking
place? It depends on who you’re asking the question, and what is meant by a good
outcome.

No, say the political observers.
There can be no real opening up if the old instruments of control are still
being strenuously kept in place. True, the ISA (Internal Security Act) is not
likely to be used as in the past when political detainees were either
incarcerated without trial or forced to flee into permanent exile; nevertheless
the government has made clear that it has no intention of doing away with this
powerful instrument. True, the fearsome defamation suit by which political
critics could be ruined financially is unlikely to be wielded with the same
frequency and vigour as in the old days; nevertheless, the government has
warned online blogs not to get out of line, to remove certain offensive
postings, or else -. Most recently, the government refused to give permission
to a prominent political activist to go abroad to take part in a convention. All
these signs carry an unmistakable message: GE 2011, or no GE 2011, our position
with regard to political dissent remains the same.

In general, it is a reflection
of dampened hopes that one year after a so-called transforming election, not a
single Singaporean believes that open debate, public assemblies and street
demonstrations which are taken for granted in neighbouring countries, will take
place in Singapore, as long as the PAP is in power.

So how can one talk of a good
outcome from GE 2011?

Wait, says the government. Get
your perspective right. We are keeping our promise, and good things are
happening. Just look around you and see what is being done to improve the lives
of the people, especially the lower income group. Never have we made a more
sincere and sustained effort to translate policies into quick action, to benefit
all sectors of the population, whether through new, affordable housing, better
medical care, an improved transportation system, the provision of more lifts in
old housing estates for the elderly and infirm, improvements in the education
system to take care of those with special needs, new parks and recreational
spots, to improve the quality of everyone’s lives, etc. Where policies cannot
be changed to match the expectations of the people, our ministers take great
pains to explain why, asking for the people’s patience, constantly reaching out
to them, including through social media, ever ready to listen and make
compromises, if possible. What more can you ask, for goodness’
sake.

Indeed, the government’s new
approach is distinguished by a social reach never seen before, and an emphasis
on the soft touch and the light footprint, completely at odds with the old,
no-nonsense, peremptory style.

So what is really happening?
What can one make of all these mixed signals in the political
scene?

Since the government’s new
approach has become national policy, the result of an obviously well thought out
response to the special challenges of GE 2011, it is worthwhile to examine it
carefully and understand its implications. Putting it under the microscope of
close, detailed scrutiny and analysis will enable one to answer the following
pertinent questions: is the policy congruent with the oft affirmed goal of
putting the people first? Will it prove wrong all those skeptical political
observers out there? Can it predict the future Singapore political
landscape?

A good starting point for the
analysis of this new approach is the term that the government itself has
consistently used for it – ‘inclusiveness’. Again and again, the ministers
remind the people that ours is an inclusive society. Actually, the term was used
for the slogan chosen by Mr Lee Hsien Loong more than ten years ago when he
became Prime Minister (in keeping with the traditional practice of prime
ministers to choose a short, pithy phrase as a kind of rallying cry at the start
of the premiership, as witness Mr Goh Chok Tong’s choice of ‘A Gracious
Society’, and before him, Mr Lee Kuan Yew’s call of ‘A Rugged
Society’)

In its present revived form,
the slogan of ‘An Inclusive Society’ has been greatly enlarged and elevated
into a major policy, with new strength, scope and purposefulness. In its strong
commitment to ensuring that no one is left out in the overall goal of material
prosperity and well-being, it surely stands out as a laudable policy that is,
alas, rarely seen in most societies in the world.

But the forensic analysis soon
reveals that mixed up with this admirable goal is one that is decidedly less so.
It is the goal of self survival and power maintenance that is part and parcel of
the realities of the political world. In the aftermath of a bruising GE 2011
which for the first time in Singapore’s electoral history made people think of
the hitherto unthinkable possibility of the PAP government losing dominance a
few more general elections down the road, it is to be expected that any
post-election policy of the PAP would have to aim at preventing this
catastrophe.

Indeed, so great was the
humiliation suffered, such as the shocking but necessary resignation of the
Party’s most respected member and founding father, Mr Lee Kuan Yew, that one
can easily imagine the PAP government grimly vowing to do whatever it takes to
make sure it will never have to endure such a punishing experience
again.

Hence the policy of
inclusiveness may be seen to have two quite different goals intertwined with
each other – the first, publicly affirmed one of service to the people, and the
second, privately espoused one of making sure that the shock of GE 2011 would
not be repeated at the next general election, indeed, ever again. How can such
contradictory aims be reconciled? How will they play out in public view, in the
months to come? Will Singaporeans suffer a Quo Vadis where-do-we-go-from-here
anxiety?

Here are some thoughts, some
only tentative and conjectural, on this very complex and intriguing
subject:

i) The PAP leaders have at least
four years to see through their policy of inclusiveness, a period of time that
will presumably be adequate for the construction of new housing developments,
roads, trains, hospitals, parks, etc. The results of the policy will hence take
the form of highly visible evidence of a promise sincerely made and efficiently
executed, completely reversing the GE 2011 negative image of a government grown
complacent and incompetent, allowing huge influxes of foreigners to compete with
its own citizens for basic amenities.

ii) The government, having
learnt the hard way in GE 2011 about the power of emotional appeal, will
increasingly make strategic use of it. The Prime Minister himself will set the
trend, for instance, by joining Facebook to interact with Singaporeans in
friendly sharing of personal preferences about food, recreation, etc. At every
opportunity, such as the celebration of May Day, he will drive home the message:
‘Singaporeans, you come first.’ The younger ministers, free from the old austere
image of the PAP, will be in a better position to interact with the younger
Internet generation. There are frequent pictures in the mainstream newspapers of
these young ministers jollying around in schools, the sports field, hawker
centres. Overall, the PAP government will no longer be seen as a distant, aloof
leadership, but as ‘one of us’.

iii) The inclusive approach will
put a human face on the PAP government and thus rob the opposition parties of
their trump card of representing it as callous and uncaring. Indeed, it will
effectively cut the ground from under the feet of the opposition, particularly
the popular Workers’ Party. With the majority of the people contented with what
is being done for them, the opposition may have no choice but to concentrate on
the one remaining substantial issue – the government’s suppression of political
liberties. But when buses are not overcrowded, trains work, roads are clean,
jobs are available, the increased cost of living is offset by government
subsidies or pay-outs, and, best of all, when the government is seen as living
up to its noble post-GE 2011 promise to be ‘servant leaders’, ideology is no
longer important or even relevant.

iv) The inclusive approach will
go well beyond the provision of basic amenities of affordable housing, roads and
medical care, and conspicuously include a whole slew of measures to actively
promote those domains of finer pleasures and deeper self-fulfilment, such as the
arts, sports, recreation, self-development, lifestyle choices, community
projects, humanitarian and environmental causes. Such an enlightened and
sweeping liberalization by the PAP government, so different from the strictly
commercial ventures normally associated with it, is exactly what will appeal
to the young, the idealistic, the well-heeled, the very groups that probably
voted against the PAP in GE 2011.

v)The only domain that will not
benefit from this opening up will be the political one, mainly because of an
ingrained, intense dislike of political opposition per se, an attitude best
exemplified by Mr Lee Kuan Yew. This domain will be systematically isolated,
ending up forgotten in the overall excitement of a burgeoning, blossoming
society taking its place among the best in the world. If the idealists give up
the fight, withdraw into obscurity or simply shrug and move over to the other
side, it will be a welcome outcome for a government determined to erase them
quietly but permanently from the political landscape. By the next election it
may see fit to employ certain, very subtle measures of control to curb the
power of the Internet crowd that it had so badly underestimated in GE 2011,
but will shrewdly make it appear as a decision that comes from the people
themselves, for the sake of social orderliness and
stability.

vi) In order to soften its image
of harsh repression, it will allow, perhaps even encourage, political criticism
of the harmless kind, for instance, the raucous political satire of theatrical
productions which affect only a small group of theatre-goers. It may approve
of the occasional, hard-hitting political commentary in the mainstream
newspapers, that nevertheless knows how not to go beyond the famous
out-of-bounds markers. But it will make it difficult for political clubs to be
set up in schools, colleges and universities. At all times , it will avoid
giving the impression of harsh intolerance, aware of bad press, regionally and
internationally, especially if its ranking in global surveys of press and
political freedoms continues to be dismal. Securely plugged into the global
order because of its aggressive brand of capitalism, it will be increasingly
sensitive to world opinion, and will make sure, for instance, that the critics
of the proposed setting up of a Yale-NUS (National University of Singapore)
school of liberal arts will not have cause to say, ‘We were right! Another
example of the Singapore government’s suppression of academic and individual
freedom! Yale should have never tied up with NUS.’ At all times, it will
maintain a fine balancing act between keeping its benign public image and its
private distaste for political opposition; if there has to be any tilting, the
distaste will prevail.

vii) If by the next general
election, it regains electoral ground lost in GE 2011, which outcome is likely
if it continues to prosecute its policy of inclusiveness systematically and
opportunistically, this question may be asked with some anxiety: will it go back
to its old model of governance which it had always been more comfortable with?
After all, if the driving force for the re-invention and the people connection
had come, not from any genuine change of mind and heart, but mainly from
election pressures, could it as easily disappear once these
did?

The above is admittedly a
rather pessimistic reading of the signs and a dismal prognosis of the future of
the political scene in Singapore. (I confess that my exuberant optimism during
and immediately after GE 2011 has since subsided considerably) It is inevitable
that a close analysis of any complex situation soon uncovers elements that
otherwise go unnoticed, and it will always be the onerous task of political
observers to temper enthusiasm with doses of skepticism. It will also always be
the hope of the skeptical observer to be proved wrong.

Throughout this analysis, one
sobering observation is clear: that the government’s policy of inclusiveness
rather paradoxically excludes a certain sector of the population and citizenry –
the political dissidents. This group, usually characterized by a strident
individuality and combative style, may not be very likeable to the majority. But
no society is without its small core of activists who, at the very least, it has
to tolerate (unless of course they are a threat to society through their
espousal of violence) Since the activists have made it their lives’ work to
expose the ills and deficiencies in their society and agitate for change, they
could, under certain circumstances, be the very agents of change and renewal,
the very mutant genes, to use a common biological analogy, that can give new
resilience to a species and even save it from extinction.

With reference to the Singapore
situation, they have the right, like other Singaporeans, to benefit from the
benign reach of a new policy that likes to draw attention to its inclusiveness.
To consign them to the margins of society is, at the least, to define that term
inadequately, and at the worst, to make a mockery of it.

International human rights lawyer, Bob Amsterdam, was detained and turned back at Changi Airport when he visited Singapore on Sunday 20 May 2012.

Mr Amsterdam is acting for Dr Chee Soon Juan on the international stage and assisting him in on-going legal matters as many of Dr Chee's prosecutions involve international customary law. He is also the legal counsel for the SDP.

Mr Amsterdam is doing this on a pro-bono basis. He runs his law firm Amsterdam & Partners which has offices in Toronto and London, taking on a wide range of cases from sovereign wealth funds to human rights.

When he arrived at the airport, his passport was impounded at Customs and he was placed under detention. He was then put on a return flight. He was not given a reason for the refusal of his entry into Singapore.

Mr Amsterdam was visiting Singapore to discuss with Dr Chee legal matters regarding the denial of human rights in the country as they relate to the United Nation's Universal Declaration of Human Rights. The Government continues to prohibit Dr Chee from traveling outside of Singapore because he was made a bankrupt by former prime ministers Mr Lee Kuan Yew and Mr Goh Chok Tong.

Monday, May 21, 2012

In 1987, I was at junior college. Just across the road, twenty-two other Singaporeans were at Whitley Road Detention Centre. They were locked up under the Internal Security Act, a sinister law designed to silence critics, first of the colonial government and later of the People’s Action Party who had promised to bring freedom to the people of our island.

Speaking to the press in 1995, after a whole generation had been effectively silenced, then Senior Minister, Lee Kuan Yew, told The Straits Times:

"As Prime Minister, I reserved executive powers in the Internal Security Act and the Criminal Law (Temporary Provisions) Act, both inherited from British times, which I did not repeal in order to be able to act against subversives or criminals like drug traffickers against whom there is insufficient evidence for a court of law, without having recourse to the courts.

In other words, I was my own carrier of a hatchet. I needed no hatchet man.

All those who have been dealt with by me know that I have never flinched from going into a dark street on a dark night and it happens to be a cul-de-sac. No outlet – either the gangster of I will come out alive.

I have done this a few times. I am prepared to do this again."

These brave words belie an insecure man; a man who has never had to meet a gangster in a dark alley. A man who played out the dismal drama of his bullying oppression by recourse to powers outside and beyond himself. Power operated by henchmen against those who dare to think a different world. Power to make men torture one another. Powers which allowed Operation Spectrum to happen.

I was too young at the time of the arrests to take much of an interest in them. I knew none of the detainees or their families personally. And even if I wondered what lay up Onraet Road which I passed every day on my way to the bus stop I was insufficiently curious to find out. Today, having read Teo Soh Lung’s book, Beyond the Blue Gate, an autobiography of her two-year detention, I know I would have been met by a blue metal gate and another world beyond. A world I was entirely innocent of until I arrived at Sheffield to commence postgraduate work in August 1996. Suddenly I was exposed to the truth of Operation Spectrum.

I devoured what I found: books and articles and newspaper clippings about that distant moment in our past when, like a key slammed in a bolt, Singapore suddenly stopped being a community and became a police state. It was a world where people were imprisoned for helping the poor; where men were ordered to torture their fellow citizens and found it agreeable to do so. A world where rulers reshaped their actions into a truth recognisable only to them: a government determined to stamp out even the possibility of ideas or activity contrary to its worldview.

The Singapore in which the detainees happened to find themselves in the mid 1980s was beset by a deep recession, the result of the government’s ambition to upgrade the economy from one where low-skill production manned by cheap labour gave way to high technology. A programme aimed at what the then Minister for Trade and Industry, Goh Chok Tong, described as a Second Industrial Revolution. The failure was widespread and deep. It was typical of centralised management, of insufficient forward planning and limited understanding of the global economy.

Singapore was not ready for such a massive and wholesale restructuring. It was too small on the world stage to effect such change and too dependent on capital and production flows which were decided far away. The result was the worst recession the nation had known in twenty years.

Unemployment numbers soared and the factories began to operate on 24-hour shifts to recoup losses. The social impact was considerable although the controlled media, by and large, were silent. It was left to social workers, lawyers, student activists, playwrights, and religious leaders to highlight the problems and try to alleviate the distress of the unemployed and the poor.

On the political side, the middle eighties was a period of neoliberal strongmen. In Manila, Ferdinand Marcos still oppressed his poverty-stricken people, once one of the wealthiest in the region. Further south in Jakarta Suharto continued his harsh reign. Across the Causeway, Mahathir Mohamad had just come through his second General Election. In the west, Margaret Thatcher and Ronald Reagan, loud proponents of economic growth at the cost of individuals and communities, were secure in office. So was the Chilean dictator, General Pinochet, who had seized office in a coup that despatched the popular leader, Salvador Allende. In Rome, a right-leaning, anti-Communist Papacy looked less than unfavourably upon the dictators of the world and when it raised its voice to call for justice was less strident against leaders of the right than of the left.

But a wind of change was beginning to blow across the world. In 1986, Marcos was toppled in a bloodless, almost elegant coup led by the widow of his slain enemy who was strongly championed by the Catholic Church. Advocates of justice all over the world saw in the ascent of that diminutive, kindly lady to the leadership of her nation the sign of a new dispensation, one which would place people at the heart of governance.

In Singapore, the nation’s Parliament now contained two opposition members after a hiatus of more than a decade during which only People’s Action Party members occupied its leather couches. The people of Anson and Potong Pasir had responded positively to the call for better treatment of the poor emanating from the Workers’ Party member and more democracy and accountability from the Singapore Democratic Party Member. A fairer, kinder world was not far off.

But at the Istana Annexe a startled Lee Kuan Yew, jockeying hard to establish the next generation of PAP leaders, saw only unrest and a threat to the settled order. An order that, to be sure, brought significant economic growth to a tiny island only twenty years away from, in his words, “an independence we never sought”. An order founded, in his words, on “a very tightly organised society”. Confidently, he had said,

"I am often accused of interfering in the private lives of citizens. Yet, if I did not, had I not done that, we wouldn’t be here today. And I say without the slightest remorse, that we wouldn’t be here, we would not have made economic progress, if we had not intervened on very personal matters – who your neighbour is, how you live, the noise you make, how you spit, or what language you use."

As the late President Devan Nair recounted, he had greeted the news of Mr Jayaratnam’s entry into Parliament in 1981 “like a caged fury”. No doubt his return to Parliament in1984, joined there by another opposition Member, terrified him. The downfall of the once unassailable Marcos in 1986 would only have added to his alarm. It became a time to act.

When Pope John Paul visited the city state in late 1986 the Prime Minister raised his fears with him. Claiming a reverential esteem for the church’s stand against communism, he alluded to “funny goings on” in the modern church. No doubt he was mindful of the role played by the Filipino church in the defeat of his friend. (Indeed he protested to the Pope that he was no Marcos.) And of course in terms of that man’s blatant ransack of his people’s wealth, he was not. In terms of the general uplift of the population that Lee’s government had achieved in the past thirty years the assertion must be accepted as true. But not all of the community had shared in the progress and there were significant pockets of deprivation and poverty, enlarged by the recession.

Twenty-two young men and women, motivated by the relief of suffering, went among the poor, comforting the afflicted, cataloguing their hardships and educating the community. The worst fallout was borne by local factory workers whose wages and conditions were not keeping pace with the overall (in some years, spectacular) economic growth. Among their number were lowly-paid, badly-treated migrant workers whose rights and conditions Jolovan Wham, the social worker who runs a labour welfare organisation, and won two awards this year for his work, will confirm have shifted very little.

That Wham is able to continue his work, in many ways far more outspoken than that of the activists of 1987, unmolested by the state, is testament to how much our society has grown. But these days are a long way off from 1987 when in the early morning of the 21st of May, the men and women of the Internal Security Department were despatched to arrest from their beds, in the silent hours of the morning, sixteen men and women (later to be joined by a further six) whose values had become so despised of the government.

The foundational principle of the work that social activists do is the dignity of the individual rooted in a rights discourse that is such a valuable part of our human heritage. We recall the uplifting words of the first article of the Universal Declaration of Human Rights:

"All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood."

The idea of rights being inherent in individual conscious entities is an old one. We instinctively know that everyone is endowed with certain entitlements merely by reason of being human. As human beings, we draw from our common spiritual and philosophical heritage and we agree that by virtue of having consciousness, being able to feel pain, being moved to share in (and therefore alleviate) the sufferings of others, we enjoy certain rights. We basically agree that our fellow human beings should have access to the full range of resources that enables them to grow and develop not merely as homo economicus but also as entities with hopes and dreams, creative urges and compassionate impulses. Those same attributes that lead us to detest suffering also guide men and women to work for their removal.

But in years following, an almost convincing argument crept in: that social justice must take second place to economic development. This found a conceptual home in the theory of ‘Asian values’ with Lee Kuan Yew as a most vociferous proponent, declaring, “A country must have economic development, then democracy may follow." The Asian financial crisis of 1997 decisively put paid to that idea and Lee himself, in his autobiography published three years later, went so far as to say that actually such values are shared by humanity as a whole. Thanks to the important work of the Nobel laureate, Professor Amartya Sen, among others, today we know instinctively that human rights and economic development should and can go hand in hand. Otherwise, the denial of rights becomes the very means by which adequate resources are restricted from the broad mass of the community and distributed more abundantly among the rich and the powerful. Singapore’s cabinet ministers’ wages are a case in point.

Instinctively, these ideas of fairness and justice formed the basis of what the twenty-two who came to be referred to as "Marxist conspirators” were advocating through their writings, their literary productions, and their work among the poor. They laboured peacefully to uplift their brothers and sisters from whose hands we secure our wealth. Though they were called conspirators, they worked entirely in the open. Though they were accused of seeking the violent overthrow of the state, in all of their writings they denounced aggression and advocated collaboration and partnership.

The government made no case against them apart from fanciful assertions duly reported in the press complete with illustrations and charts. But from all the available reliable evidence, and there is much, these men and women were as far away from conspiracy and violence as it is possible to be. The simple and very straightforward reason is that there was no case. Prime Minister Lee said in 1988,

"It is not a practice, nor will I allow subversives to get away by insisting that I’ve got to prove everything against them in a court of law or evidence that will stand up to the strict rules of evidence of a court of law."

As a lawyer schooled in the English legal tradition, he would have been aware that the rules of evidence have been carefully built up precisely to safeguard against the caprice of rulers. It is no wonder that the PAP government has refused international calls for a commission to investigate the claims of a violent Marxist conspiracy. When the Home Affairs Minister recently pronounced on the use of the Internal Security Act he was unable to offer any evidence of the veracity of the government’s assertions in 1987 and had to resort to allegations and hyperbole.

And significantly, Deputy Prime Minister Tharman Shanmugaratnam, speaking in 2001, declared, “Although I had no access to state intelligence, from what I knew of them, most were social activists but not out to subvert the system.” He should know for not only was he a friend of one of the detainees, he himself was investigated for similar false charges.

The twenty-two were not out to subvert the system. The singular evidence of their work was that they functioned within the system. The government did not act to avert disorder and carnage. The reality is that the government’s objection was to their work among the casualties of the economic policies of the 1970s and 1980s. They told them that, regardless of Lee’s characterisation of them as “economic digits”, they were in fact beings of worth and prestige. That their privations mattered; that they were a blot on the government’s copybook, an insult to its claim to Confucian government. It had turned a deaf ear to their cries and intimidated the media and the academe into silence so that their fellow Singaporeans might not know they existed. The spoke truth to power and power was offended. It responded in the most brutal way: by taking away their freedom and by inflicting pain on their bodies.

Recalling the case of Operation Spectrum, and reading the papers gathered by concerned parties all over the world, I am suddenly struck by the realisation that the real conspirators, the real practitioners of violence were the government and its officers. Its construction of this elaborate tale of shadowy fifth columnists patiently and painstakingly planning the violent deposition of the PAP government to usher in a Marxist utopia would be laughable were it not for the psychological damage it left on our society and on the detainees. They constructed poor arguments and made clumsy allegations of clandestine networks. They told convoluted stories that imputed culpability from innocent, pedestrian activities. They humiliated a senior religious leader. Most shameful of all, they used brutal torture to elicit false confessions. This is the real narrative of the era. Our government forfeited its moral right to lead the nation the instant it resorted to torture.

Now, let us be clear. The interaction between economic stability and human rights is a reality: a perennial exchange and a constant weighing up of priorities. But today we countenance a nation whose GINI coefficient (high even in 1987) is almost double that of the First World, whose ratio of income between the top and bottom 20% of earners has doubled in twenty years, whose elders work into their old age or scavenge the dustbins of our nation while our leaders still draw the highest wages of politicians anywhere in the world. We are entitled to wonder why the persistent promise of future wealth has never arrived for the common man. Have we not mortgaged our values to pay a cheque drawn upon the hopes and dreams of our people only to be told that the cheque has bounced?

This question was posed in 1987. Doing research, writing reports, engaging in public debate, the detainees sought answers to these questions. But they did not vest the responsibility to find solutions solely with the government. Nor did they enter into a quarrel. Instead they went out quietly among the poor and the marginalised to work out what to do. They crafted many solutions: legal advice, social activities, language classes, support for poorly-treated workers to negotiate with their employers. They also sought to enlighten the community and train us to care for the oppressed.

The government’s alarm was not at the possibility of a Marxist revolution. It was that the status quo was being challenged. It was that the economic digits, whose quiescence and docility facilitated the wealth that Singapore became renowned for, were being made aware of their rights. The cardinal sin that the detainees committed was to tell the poor that their state was neither inherent in their genes nor characteristic of their ethnicity but the outcome of government philosophy. Lee famously said, “God did not make the Russians equal. Lenin and Stalin tried to. You are too long, they chop you down. The end result is misery.” In the pursuit of meritocracy, a laudable idea, his government formed instead a society intolerant of the weak and sceptical of compassion. The twenty-two paid heavily for their audacity and presumption.

Today, we are twenty-five years from that dark moment. There are many Singaporeans alive today who were not born when Operation Spectrum took its terrible course but its effects are yet with us. Individuals and organisations still act under a cloud of uncertainty, unsure of where the famous Out of Bound Markers lie since ministers have said they cannot identify them until they are breached. Such a formulation would be immediately recognisable in a civilised society as an insidious authoritarianism.

Twenty-two young idealists, optimistic of our society’s capacity to become better, decided to make it so. That they (and we) are only just recovering from the effects of Operation Spectrum is testament to its dreadful effectiveness. If on the anniversary of that day we celebrate their courage, it is because we know their work was right. The government was wrong. It is only the passage of time - nothing more - that has sent them from the political stage and released them from the obligations of justice.

* “I have always loved the Catholic Church”: former priest Edgar D’Souza gives a detailed and frank account of his experience of the harrowing time during Operation Spectrum (here)

******************************

Dr Vincent Wijeysingha is a lecturer is social work and Treasurer of the Singapore Democratic Party. He writes in his personal capacity.

On Saturday 2 June 2012, That We May Dream Again, a commemoration of Operation Spectrum including speeches by Dr Wijeysingha and others as well as an exhibition, will take place at Speakers’ Corner from 3 to 7pm.

Friday, May 18, 2012

While Asian giants China and India rapidly build up their already huge military arsenals, the tiny, prosperous Southeast Asian city-state of Singapore has been quietly ramping up defense expenditures at a rate disproportionate to its size and population.

With only about 5.1 million people (about one-fourth that of the city of Beijing) and an annual GDP of US$260 billion (about the same as Finland or Chile), astonishingly, Singapore was the fifth-largest arms importer in the world from 2007 to 2011, according to the Stockholm International Peace Research Institute (SIPRI).

(By contrast, Israel, which is surrounded by enemies and lives under the constant threat of military attack, spends about 15 percent of its GDP on defense, andit pays much more in social and health care costs than does Singapore.)

"[We are] mindful of our responsibility to spend carefully and wisely," he said.

"We buy only what we need, scrutinize available options for the most cost-effective solution."

In fact, Southeast Asia, as a whole, has embarked on a bewildering armament spree in recent years. Singapore's nearest neighbors, Malaysia and Indonesia, have also been buying guns, tanks and missiles and other expensive toys at a hectic pace.

In 2011, the region's defense expenditures jumped by 13.5 percent to $24.5 billion, according to IHS Jane. By 2016, that number is expected to reach $40 billion.

Strangely, there have been almost no conflicts between Southeast Asian nations in several decades.

Thus, the mania for acquiring weapons appears to be based on some existential worries and has, of course, been financed by rapid economic expansion.

However, Singapore appears to be unique in its paranoia. Not only does Singapore buy arms, but the Borgia-like city-state also sells an array of weapons to other nations (both developed and emerging).

Part of Singapore's obsession with security lies with the Strait of Malacca, the narrow stretch of water that serves as a crucial link between the Indian and Pacific Oceans and which Singapore heavily depends upon for trade and transport. About 40 percent of global trade passes through this narrow conduit of water.

Duncan Innes-Ker, Asia analyst with the Economist Intelligence Unit (EIU) said Singapore has long been a relatively high spender on defense.

“In the very early years this was probably at least partly driven by its poor relations with much larger neighbors, which left it feeling insecure,” he said.

“China may now be playing the role of the intimidating neighboring power, but these days strong defense spending is more a reflection of the city-state's need to police the region's shipping lanes.

Singapore depends on seaborne trade for its prosperity, so ensuring the smooth passage of vessels through the Strait of Malacca is vital.”

In the past, Innes-Ker noted, Indonesia and Malaysia tended to underspend on defense, leaving wealthier Singapore to bear much of the burden.

In keeping with its security priorities, Singapore has established very close relations with the U.S.

In fact, Singapore just signed a $435 million deal to sell laser-guided bombs, vehicles and aerial refueling services, among other things, to the U.S.

In recent years, Singapore has also signed contracts to purchase 12 F-15 fighter jets from Boeing; 110 Leopard-2 battle tanks from Germany; and six missile frigates from France – all, highly sophisticated, state-of-the-art devices.

Singapore’s military ties with Washington go deeper than just arms transactions. The city-state recently agreed to permit American warships to deploy in its waters for a 10-month engagement, raising fears in China, as Washington shifts its military focus from the Middle East and South Asia to the Far East.

As part of that strategy the U.S. will base four of its Littoral Combat Ships in Singapore.

Singaporean Defense Minister Ng told The Straits Times newspaper: “The U.S., I would say, is our closest security partner, and I don't see any country displacing the U.S. as that.”

However, Singapore’s single-minded devotion to its military and defense goes all the way back to its chaotic founding in 1965, when it separated from Malaysia in a messy “divorce” partially exacerbated by racial tensions between Malays and ethnic Chinese.

For example, since that time, all males in Singapore have been mandated to military service.

According to Globalfirepower.com, Singapore’s military currently has about 72,000 active personnel and about 300,000 active reserves. This means that almost 8 percent of the country’s population is either on active or reserve duty.

In a thesis paper on Singapore’s defense policy, Maj. Lee Yi-Jin of the Singapore Armed Forces wrote: “The magnitude of the country’s defense expenditure has... led to the occasional raised eyebrow. For example, Singapore’s reported defense budget for 2009 was more than that of Malaysia’s and Indonesia’s put together, which some may find surprising given the relative sizes and populations of these three neighboring countries.”

[Indeed, Malaysia and Indonesia boast a combined population of about 270 million, 54 times the manpower of Singapore.]

Lee further declared that military spending in Singapore is not directly proportional to any perceived security threat, but rather is designed to expand the small nation’s role in international affairs.

"The role of Singapore’s defense policy has since evolved alongside changes in the security environment,” he wrote.

“As the threat of inter-state conflict has receded, the significance of Singapore’s defense policy has become increasingly associated with its contributions to Singapore’s non-military instruments of power, and in particular its economic and diplomatic instruments… The primary motivation underlying Singapore’s defense policy has shifted away from a provision of security and toward an increase in the country’s international influence."

Lee also said he expects to see no change in Singapore’s heavy emphasis on defense and military upgrades.

"Singapore’s leaders would appear to have skillfully removed any debate on Singapore’s defense policy from the realm of economic cost-benefit analysis,” he wrote.

“Instead, the current policy is couched as necessary to maintain the unquantifiable concept of ‘deterrence’, and to provide the stable environment necessary for foreign investment and productive economic activity.”

Moreover, given Singapore's healthy financial status, the government is highly motivated to maintain exorbitant defense spending.

Innes-Ker of EIU noted that the country has a large trade surplus and its fiscal position is extremely healthy, so there is little pressure for it to reduce military spending on either of these accounts.

“While defense spending may divert some resources away from social priorities, this does not appear to be a major concern for most [Singaporean] citizens,” he said.

Dr. Tim Huxley, executive director at The International Institute for Strategic Studies-Asia, commented that Singapore's defense policy and strategy provides the city-state with an enviable degree of external security which has, in turn, reassured local and foreign business investors, thereby providing one of the bedrocks of Singapore's economic success over the last 45 years.

“While Singapore spends a lot on defense, some of this spending has fed back into the wider economy, partly through the development of a local defense-industrial sector, which provides a significant part of the SAF's material requirements and has also exported defense equipment on a small scale.”

Wednesday, May 16, 2012

by Christopher Balding*The writer is a professor of
business and economics at the HSBC Business School at the Peking University
Graduate School. An expert in sovereign wealth funds, his writings have been
published in such leading journals as the Review of International Economics, the
Journal of Public Economic Theory, and the International Finance Review on such
diverse topics as CDS pricing, the WTO, and the economics of adoption and
abortion. His work has also been cited by a variety of media outlets including
the Wall Street Journal and the Financial Times

I have gotten emails asking if I can simplify some of the points I have been trying to make, so I have decided to try putting up pictures that capture some of these points. Hopefully, a picture will be worth a thousand words.

The first figure is a comparison of the FTSE Strait Times Index and the MSCI Singapore equity indexes since 1974. The MSCI is slightly lower owing probably to differences in how it is calculated and being based on more stocks while the FTSE focuses on the bigger companies. As you can clearly see, they are very closely correlated.

Our next picture is the same exact picture, except this time I have added the returns that Temasek claims to have earned over the same time period. Given that Temasek has been a large investor on the Singaporean exchange, owning at times more than 25% of the Singaporean stock market, they should be closely related.

As one can clearly see, Temasek performs much better than even the stock market in its home country of which it is the major investor. In fact, much MUCH better. Is it technically possible Temasek earned this return? Yes. Is it probable? No.

Maybe Temasek could begin investing my money if they are that good? Maybe someone in Singapore would like to invite me for coffee to discuss?

Note: Because Temasek does not break out its returns year by year, I assumed that it earned 17% every year. While this will change the year to year valuations, it does not impact the final valuation.

Monday, May 14, 2012

*The writer is a professor of business and economics at the HSBC Business School at the Peking University Graduate School. An expert in sovereign wealth funds, his writings have been published in such leading journals as the Review of International Economics, the Journal of Public Economic Theory, and the International Finance Review on such diverse topics as CDS pricing, the WTO, and the economics of adoption and abortion. His work has also been cited by a variety of media outlets including the Wall Street Journal and the Financial Times.

Ever since my paper [note*] on Temasek and Singapore was covered in Mostly Economics writing a plea for “clarifications from
Temasek and SG govt”, I have begun receiving emails and postings to either
explain or defend something further. Today, I will focus on the questions
pertaining to the debt side.

Abstract:
Financial data reported by
Temasek Holdings and Singapore reveal problematic characteristics. First,
Temasek reports an average annual return of 17% for 35 years despite Singaporean
stock returns averaging less than 8% during this same time period. Given the
range of stock market returns and its portfolio companies’ returns, it is highly
improbably that Temasek has earned the returns claimed in its annual reports.
Second, Singapore has become one of the most indebted countries in the world
despite supposedly running large and sustained government surpluses. Given
publicly available economic data on Singaporean finances, there is a minimum of
$350 billion SGD or $275 billion USD unaccounted for from historical surpluses
and financing operations. Third, given these results I find that for every $1
SGD in public borrowing, Singapore has received only 25 cents of publicly held
Singaporean assets. Either financial returns have been drastically overstated or
there are large unreported Singaporean controlled holdings._______________________________________________________________

The basic question numerous posters and email have raised is whether public
Singaporean debt is actually attributable to state owned enterprises or the
social security fund known as the Central Provident Fund? There is a short
answer and a long answer. The short answer is that it doesn’t matter. Think of
a company like GE. If GE Capital goes out and borrows money, there is still an
increase in the total debt of GE the parent company. So whether it is the
Central Provident Fund or the state owned enterprises, at the end of the day
there is still a rapid increase in the total debt of Singapore.

The longer more detailed answer is even more unpalatable. While there is most
definitely a significant portion of Singaporean public debt issued by the
Central Provident Fund but guaranteed by Singapore, the important part is
not who holds the debt, but rather what happened to the money
that was borrowed. If the Singapore state issues debt, whether it is to a
foreigner, a private citizen, or the Central Provident Fund, Singapore now has
more funds that they must either spend or invest. That inflow from issuing debt
does not just disappear.

Since 1990, the Singaporean government has realized cash flow from increasing
borrowing of $250 Billion SGD. To add on to this, the Singaporean government has
enjoyed public surpluses of $262 Billion SGD. Think about that for one minute:
free cash flow into government coffers between additional borrowing and
surpluses averaging more than 16% of GDP between 1991 and 2010. Since 1991
alone, without factoring in revenue from interest, accumulated cash
flow from additional borrowing and government surpluses has totaled
$512 Billion SGD.

To give you two numbers to help you wrap your head around that number, that
is equal to 155% of 2011 Singaporean GDP or roughly equal to the combined assets
of Temasek the the Government Investment Corporation of Singapore (The GIC does
not publish assets under management but most estimates have it in the $250-300
billion USD range). The $500 billion dollar question then is: where did all
this money go? In other words, how does the total increase in debt and
the total government surpluses equal the estimated amount of assets under
management? (It is also important to remember that this data only goes
back to 1990, not the 1974 since Temasek inception).

Now let’s turn to where the money has gone. Here is a graph of the
hypothetical growth of assets under management by government linked entities
such as Temasek or the CPF.

If these free cash flows averaged annual growth of only 1%, assets
would still amount to more than Temasek and the GIC combined. If annual growth
was the GIC average of 7%, Singapore would still be sitting on more than $1
trillion SGD rather than the current estimate of around $500 billion.
A 10% rate of return would leave Singapore with $1.4 trillion SGD. If
public surpluses and borrowing were invested and returned even a balanced
portfolio average, the current assets managed by public bodies in Singapore
would truly be staggering.

As was noted in the original paper, this implies one of two things: 1) the
returns are fictitious and there has been a lot of money lost OR 2)
there are enormous unreported holdings controlled by Singaporean public
entities. You simply cannot explain $500 billion SGD in surpluses and increased
indebtedness without asking where that money has gone. As of right now, there
is no record of public Singaporean assets to match what we would expect to find.
Show me additional assets that should be there. Temasek and GIC don’t have
them. Where is the missing money? If it wasn’t spent, and there is no public
record of that, then it should be a financial asset under public Singaporean
control.

As a last point, if these surpluses and additional borrowing even matched the
rate the CPF pays out to Singaporean citizens of 4% would equal approximately
$750 billion SGD. This is 50% more than the estimated holdings of Temasek and
the GIC. Unless someone can find hundreds of billions of unreported Singaporean
public assets, we should assume this money has gone to money heaven.

Next time, I will describe exactly how the Central Provident Fund plays in to
all this and why Singaporean should be worried…..very very worried.

In our last post, I gave a short and a long answer to questions about the
importance of who owns the debt. The short answer is that it doesn’t matter who
the government of Singapore owes money to, it still owes money to them. Some
readers and posters said that if the Central Provident Fund (Singaporean social
security) owns the debt issued by the Singaporean government, then it doesn’t
really matter. Let’s examine that question in greater detail.
The CPF collects mandatory contributions from Singaporean citizens and pays a
statutory rate of return to its account holders currently ranging from 2.5% to
4% depending on the type of account. The contributions are intended to be used
for old age income support and health care among other basic services. The CPF
holds $185 billion SGD of investment assets under management but also $185
billion SGD in liabilities in the form of member accounts with a net surplus
$1.9 billion. In other words, there is only a small amount of net assets under
management at the CPF.

According to CPF financial statements, 95% of CPF investment assets are
“special issues of Singapore Government securities”. In other words, the CPF is
the primary purchaser of the debt issued by the government of Singapore.

The CPF is then part of a large circle that takes money from the citizens
pays them interest and lends it to the government Singapore matching the
interests rates between the two rather closely. This leads to three important
and inescapable conclusions:

1. The CPF has minimal net assets under management and cannot
really add to our search for missing assets. In other words, the CPF cannot add
to our understanding of where we might find large amounts of net public
assets.

2. Singaporean citizens have provided enormous free cash flow to the
Singaporean government in the form of structural budget surpluses and large
amounts of lending. As I said in the last post, from 1991 to 2010 alone
the sum of budget surpluses and net lending totaled $512 billion SGD.

3. All roads still lead to the Singaporean government. The enormous volume
of free cash flow in the form of budget surpluses and increased borrowing flowed
through Singaporean government finances and was under their management.

Returning to the question I posed in the previous post, if the Singaporean
government enjoyed free cash flow from budget surpluses and borrowing totaling
$512 billion SGD between 1991 and 2002, where did the money go?

To be clear there is no public record of expenditures by the Singaporean
government to account for the $512 billion SGD in free cash flow since 1991. Nor
is there as public record of assets held by Temasek, GIC, or other public body
in large enough amount to account for such a large discrepancy. Remember if this
$512 billion earned the 7% GIC claims to have earned there should be more than
$1 trillion in assets.

The reason the CPF matters and should concern Singaporeans is simple. The
government of Singapore is borrowing money from its citizens through the CPF
payed 2.5-4% and investing that money in other assets through GIC and Temasek
hoping to earn a higher return. Publicly, GIC and Temasek claimed to have earned
7% and 17% since inception meaning they are earning a comfortable spread above
the 2.5-4% they must pay for those funds. If Temasek and GIC earn less than the
2.5-4% they pay to the CPF, the government must essentially subsidize the losses
to keep the CPF whole.

According to the data published by Temasek and the best estimates of GIC,
they hold around $500 billion SGD essentially matching the $512 billion SGD in
budget surpluses and increased borrowing or a total return of about 0%. This
leads to two frightening conclusions:

1. While estimated GIC and Temasek assets essentially produce a 0% nominal
return, when factoring in inflation, this produces real investment
losses of about 35%!!

2. The government of Singapore has essentially been subsidizing GIC and
Temasek losses by paying their implied obligations to the CPF even though the
they have not earned a rate of return sufficient to cover the cost of debt
capital. In other words, the government of Singapore is subsidizing GIC and
Temasek losses to the amount of the rate of return earned by GIC or Temasek
minus the 4% it pays to CPF account holders. Financial losses attributable to
GIC and Temasek but covered by the government of Singapore, significantly
increase the risk of CPF deposits.

There are two final points worth mentioning. First, we continue to search for
enormous amounts of missing assets. For instance, it has been suggested that GIC
and Temasek have not produced accurate accounts that would reconcile the
difference. Given that there is a minimum of $500 billion SGD in missing
assets, I am very skeptical that this is simply due to sloppy accounting.
However, the fundamental point is to focus on locating in public records the
missing assets. There needs to be a bare minimum of $500 billion SGD in
unreported assets to begin to bridge the gap between what exists and what
should exist.

Second, due to the length of this post, I only covered the CPF today and
could not cover the Monetary Authority of Singapore and its foreign reserves.
In the next post on Monday, I will analyze the MAS. Needless to say, it
doesn’t in anyway change the analysis.

*****************************************************

Part 3: Explaining the role of the Monetary Authority of SingaporeThe Balding Blog, May 14, 2012 (source)

Part 1 and 2 of this series of Singaporean public finances focused where the cash from the increased indebtedness has gone and the role of the Central Provident Fund in providing a low cost easy access source of funds for the government of Singapore. Since I answered most questions about the CPF in Part 2, people started asking about the Monetary Authority of Singapore (MAS) and its $300 billion SGD in foreign reserves.

The short answer is that the existence of $300 billion in foreign reserves held by the MAS does not change the analysis in anyway. Let me explain why.

Countries normally have three sources by which they can raise revenue or increase wealth. Taxes in all their forms, borrowing, and using foreign exchange. We have already discussed the fact that the government of Singapore has run a large long term public surplus and increased borrowing rapidly totaling $512 billion SGD since 1990.

However, another source of government wealth is foreign reserves which grow generally due to current account or trade surpluses. Foreign reserves are normally controlled by the central bank, in this case the Monetary Authority of Singapore (MAS).

Since 1980, Singapore due primarily to its currency management policies has run a structural trade surplus averaging 10.2% of GDP. To provide some perspective on this number, over the same time period the oil exporting countries Saudi Arabia and the United Arab Emirates averaged only 4% and 9.7% respectively. The current account surplus peaked in 2006 at an astounding 25.4% of GDP. To prevent the currency from appreciating rapidly due to the large and sustained current account surplus, the central bank (the Monetary Authority of Singapore or MAS) buys large amounts of foreign currency. These currency purchases designed to minimize appreciation pressures then become foreign reserves.

To provide some hard numbers, since 1980 Singapore has run an accumulated current account surplus of $353 billion USD. If this number was converted into SGD based on the year the surplus was incurred, this would translate into $556 billion SGD. Including the current account surplus has a number of implications for our analysis of Singaporean public finances and the foreign reserve assets held by MAS.

First, the source of the MAS foreign reserves are totally and completely separate from the other revenue sources under discussion. The existence of $300 billion SGD in reserves given the long term current account surplus is no surprise and is distinct from government surpluses or borrowing. In other words, the existence of $300 billion SGD in foreign exchange reserves cannot add to our knowledge when searching for missing funds.

Second, the MAS foreign reserves have been fully funded and paid for by the near constant current account surplus run by Singapore since 1980. Even in the year between 1980 and 1987 when Singapore was running trade deficits, the foreign exchange reserves grew from $6.5 billion USD to $15 billion USD or $13.9 billion SGD to $31.6 billion SGD based upon exchange rates at the time.

Third, given the level of foreign exchange reserves and historical current account surplus, the numbers appear quite plausible at their current levels with also the distinct possibility to have funded additional investments in GIC or Temasek. We do not expect all of a current account surplus to be translated into foreign exchange reserves as there are many things that influence this such as a moderately but steadily appreciating currency or liquidity operations. In other words, given the $353 billion USD cumulative current account surplus since 1980, the $237 billion USD in foreign reserves is quite plausible and also leaves significant room for significant investments in Temasek or GIC. It is important to emphasize that not all current account surpluses are translated into foreign reserves, however there is a close correlation between them.

The fundamental point that is being made here is this: the MAS foreign reserve assets have already been paid for from the current account surplus due to managed currency operations. Furthermore, given the numbers while we do not have access to the data, it is quite plausible that transfers were made from MAS to GIC for investment purposes. Finally, the MAS foreign reserve assets as sole and separate from government surpluses and borrowing, cannot add to the discrepancy in assets that should exist and the estimated assets believed to exist.

Christopher Balding is a professor in Peking University, HSBC Business School
[Link]. You can read his
article in full but I’ll summarize it as usual so there is clarity on the issues
and questions he asked:

The
Mess that is Singapore: Part I Explaining the Debt

1. Most of the public debt issued by Singapore govt consists of money
borrowed from the CPF Funds of Singaporeans.

2. Since 1990, the Singapore govt borrowed $250B and has another $262B in
budget surpluses, giving a total of of more than $500B.

3. GIC + Temasek do not publish their assets but it is estimated to be
roughly $500B.

4. Even if they return 1%, they should have significantly more money and if
returns are 7% as widely believed, the money should have been doubled.

5. What happened to the money? Is it lost or hidden?

The simple answer to this question is, the Singapore govt has never published
the total assets of the GIC so we don’t know. There is no reason yet to believe
anything sinister is going on. Former President Ong tried to get a full list of
the assets but was told it is not a simple task. Over the years, there were
reports of GIC investing in real estate, commercial properties around the world
and those have to be revalued. It’s not a mess as Christopher Baling alarmingly
claimed but a lack of information.

In his next posting, The
Mess that is Singapore: Part II Explaining the Role of the CPF:

“The reason the CPF matters and should concern Singaporeans is simple.
The government of Singapore is borrowing money from its citizens through the CPF
payed 2.5-4% and investing that money in other assets through GIC and Temasek
hoping to earn a higher return. Publicly, GIC and Temasek claimed to have earned
7% and 17% since inception meaning they are earning a comfortable spread above
the 2.5-4% they must pay for those funds. If Temasek and GIC earn less than the
2.5-4% they pay to the CPF, the government must essentially subsidize the losses
to keep the CPF whole.”

This issue has been discussed on my blog. If GIC makes above 2.5% (-4%), it
keeps the excess returns. If it makes less than 2.5%, how does it pay the debt
owed to CPF/Singaporeans? They would have to collect more taxes or print money
to monetize the debt. The other way is to kick the can down the road by delaying
CPF withdrawals. Countries build up reserves to guard against crisis and
financial instability. However, GIC and Temasek’s fund are invested in various
risk bearing assets that will be affected by crisis – the last crisis they lost
$50B. To fund the deficit in the budget due to the jobs credit in the last
crisis roughly $4.5B of reserves was used. The size of the reserves are far
bigger than what is needed to cushion against crisis – remember if the crisis is
very big e.g. local bank failures, etc it is best not to use reserves created
from borrowings from CPF to do it.

My main objection to the whole system is the fix returns for CPF account
holders who at the end of the day bear the risk if there are investment losses
and inflation but get none of the excess returns. The 2nd problem is even basic
information on the total assets is not made public by the GIC. Third issue is
the size, you can’t just keep building and controlling it because a large part
of it is paid for by ordinary Singapore taking up high debts for housing. There
has to be a limit beyond which the surplus should be used to benefit
Singaporeans in more direct ways rather than go into reserves controlled by a
small group of elites.

Our contribution to the CPF is extremely high but retirement is still a worry
for Singaporeans. This is caused by 2 things – low fixed returns on CPF money
and use of CPF for expensive public housing. Both results in flow of money to
the GIC to build up govt coffers and causes major retirement problems for
ordinary Singaporeans. Many Singaporeans accept the system as it is thinking
they can always monetize the homes for retirement (overseas?), it makes the
system all the more vulnerable as housing prices get linked to Singapore’s
ability to retire for poor and lower middle income Singaporeans. The whole
system passes the risk to Singaporeans who are already shouldering plenty of
risks due to the healthcare system and the lack of social safety nets.

Lucky Tan

* Lucky Tan is an avid online blogger since 2005. He likes to study the
thoughts of Singapore leaders and the laws of Singapore. He blogs at
http://singaporemind.blogspot.com.